Here are two sports betting stocks you’ll want to bet on

Super Bowl 58 was the most-watched Super Bowl and television broadcast in history. It averaged 123.4 million viewers across all platforms, including Global Paramount NASDAQ: PAR owned CBS Television Network, CBS Sports, Paramount+, Nickelodeon, Univision and NFL+. CBS was the big winner, with the largest audience ever for a single network. The growth of legalized sports betting has also contributed to viewership, boosting gaming stocks in the consumer discretionary sector.

Major digital sports betting companies such as Flutter Entertainment plc OTCMKTS: PDYPY owned by FanDuel e DraftKings Inc. NASDAQ: DKNG they were big winners before and after the Super Bowl. FanDuel has handled more than 14 million Super Bowl bets totaling more than $307 million from 2.5 million active users. DraftKings has received more than 12.4 million bets totaling more than $305 million from 2.4 million customers. Here are two latecomer sports betting companies that may have benefited from the Super Bowl.

Rush Street Interactive Inc.

Rush Street Interactive Inc. New York Stock Exchange: RSI operates online casinos and sports betting. They market their gambling services through the BetRivers.com, PlaySugarHouse.com and RushBet brands. They have a live casino operating in four states, live online sports betting in 15 US states, and three internationally, including Ontario, Canada, Mexico, and Columbia. Rush Street also operates 8 casino sportsbooks, including Rivers Casino in Pittsburgh, Philadelphia, Portsmouth, Virginia, and French Lick Resort in Indiana. The company is ranked in the top 4 of 5 casino and sports betting operators in the United States.

Constant growth

Rush Street reported a third-quarter 2023 EPS loss of three cents, which beat analysts’ expectations of four cents. Net loss was $13.4 million compared to $22.7 million in the same period a year earlier. Adjusted EBITDA was $4.1 million compared to a loss of $12.5 million in the prior-year quarter. Adjusted advertising and promotional expenses fell to $34.1 million, down from $44.7 million in the same period last year.

Revenue rose 15% year-over-year to $170 million, beating analysts’ estimates of $5.78 million. Average revenue per monthly active user (AMRMAU) increased 8% year over year to $374. The company ended the quarter on September 30, 2023, with $171 million in cash and cash equivalents. The Delaware Lottery has selected Rush Street as its exclusive online gaming provider. Check the heat map of the sector on MarketBeat.

Comment from the CEO

Rush Street Interactive CEO Richard Schwartz commented: “With strong revenue growth and more efficient marketing spend, we are proud to report another quarter of growing quarterly profitability on an adjusted EBITDA basis, as well as our expectation to have a positive adjusted EBITDA for the full year, underscoring our commitment to sustainable growth and profitability. Our focus on innovation and efficiency has elevated our market-leading ROI, enabling us to tackle competitive markets with notable success and resilience.” The company announced that it will release its fourth quarter 2023 earnings report on March 6, 2024, after the close, followed by a conference call at 5:30 p.m. Eastern time.

Rush Street Interactive analyst ratings and price targets I’m on MarketBeat. Shares of Rush Street’s peers and competitors can be found with MarketBeat Stock Screener.

Daily ascending triangle

The daily candlestick chart on PENN illustrates an ascending triangle pattern. The ascending trend line formed at $5.11 on January 30, 2024, rising to higher lows. Flat upper trendline resistance formed at $5.99 as the RSI approached the peak point. The daily 50-period moving average (MA) is rising to $4.72. The daily relative strength index rose to test the 70 band. Pullback support levels are at $5.47, $4.73, $4.44, $3.78,

PENN Entertainment Inc.

Land-based casino operator PENN Entertainment Inc. NASDAQ: PENN has rebranded its online sportsbook after splitting from Barstool Sports. On August 8, 2023, he signed a licensing agreement with Walt Disney Cos. NYSE: DIS, which owned ESPN to create ESPN BET. In the deal, Penn will pay ESPN $1.5 billion in cash over 10 years, granting ESPN $500 million in warrants to purchase $31.8 million in common assets from Penn Gaming. Penn has online sports betting licenses in 16 states. ESPN+ has more than 26 million subscribers and ESPN Digital was the leading sports digital platform in the United States in 2023, averaging 110.9 million unique monthly visitors.

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A punch in the stomach

On February 15, 2024, PENN reported Q4 2023 GAAP EPS loss of $2.37, missing estimates by $1.80. Revenue fell 12% year over year to $1.40 billion, missing consensus estimates of $1.52. Due to Barstool’s rebranding, the Interactive segment saw a massive decline as adjusted EBITDA was negative $39.6 million compared to $438.3 million in the same period last year. The company ended the quarter with total liquidity of $2.1 billion, including $1.1 billion in cash.

ESPN BET suffers now for a follow-up gain

While its 10 properties achieved their highest revenues ever in the fourth quarter, the big decline came from its investment in ESPN BET. They have grown the PENN Play database by 1.2 million members, with 90% of the growth coming from ESPN BET customers. It plans to launch ESPN BET in retail locations to create cross-sell opportunities ahead of the 2024 NFL season. Additionally, in the spring, in time for the NFL draft in Detroit, the Geektown sports brand will be rebranded as ESPN BET. PENN acquired from Wynn Resorts Ltd NASDAQ:WYNN acquire WSI US, LLC, for $25 million for the mobile sports betting license issued by the New York State Gaming Commission. Pending regulatory approval, this will allow ESPN BET to launch in New York in 2024. ESPN BET is expected to reach 46% of the online sports betting population with the addition of New York and North Carolina.

Insights from the CEO

PENN Entertainment CEO Jay Snowden commented, “In our interactive segment, ESPN BET attracted many more first-time depositors (FTDs) than we expected, which resulted in higher-than-expected promotional expenses.”

Snowden added: “Importantly, strong early retention and steady user acquisition have led to steady month-over-month increases in cash management as our promotional expenses have begun to normalize entering 2024. ESPN BET has also attracted mass market sports fans, highlighting the potential to expand the appeal of sports betting and grow the overall market.”

PENN Entertainment analyst ratings and price targets I’m on MarketBeat. PENN Entertainment holds a short share of 11.68%.

Daily reverse breakdown of cup and handle

The daily candlestick chart on PENN indicates an inverted or inverse cup and handle breakout pattern. The lip line formed at $20.92 on November 2, 2023. PENN rose as high as $27.21, forming a rounded high on December 28, 2023. The cup lip line tested for support again on 1 February 2024, when shares rebounded to $23.81 when the handle formed. The break of the cup lip line triggered the Q4 2023 earnings miss, falling to $20.46 and proceeding to sell off towards the $18.35 support. The pullback support levels are at $17.53, $16.91, $15.63, and $14.96.

Before you consider Rush Street Interactive, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Rush Street Interactive wasn’t on the list.

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